The law governing California real estate investment, development, and secured lending evolves in real time | Lessons from the courtroom battlefront

Just Because A Deed Is Void Doesn’t Mean It Can Be Challenged “Any Time”

In a case reviewed last year, Salazar v. Thomas, a California Court of Appeal weighed in on how the statute of limitations applies to quiet title claims. The court held that when an owner seeks to quiet title against a forged (and therefore void) deed of trust, the statute does not begin to run based on the lender’s simple issuance of a Notice of Default.

A new opinion published this month — Walters v. Boosinger — addresses (and shoots down) the contention that a quiet title claim based on a void deed is effectively immune from the statute of limitations and can be brought at any time.

Facts: Son claims dad’s grant deed to dad’s ex-girlfriend was void, thus he can bring quiet title claim “at any time”

Scott Walters, the administrator of the estate of his father, Randy Walters, pursued a quiet title claim against his father’s former girlfriend, Valerie Boosinger.

A 2003 grant deed named Randy and Valerie as owners of the disputed property in joint tenancy. After Randy died in 2013, Valerie claimed sole ownership of the property as the surviving joint tenant. Scott’s claim for quiet title alleged that the 2003 grant deed was void ab initio (from the beginning).

According to the claim, Randy and Valerie purchased the property in 1997 as tenants in common, with Randy receiving a 66.7% ownership interest based on his larger contribution toward the down payment. The 2003 grant deed, which changed ownership to a joint tenancy, was recorded as part of a refinancing. Scott alleged that Randy never intended to create a joint tenancy, that Valerie’s friend who served as the mortgage broker’s representative took advantage of Randy’s alcoholism and chemical dependence and failed to ensure that Randy understood the nature and effect of the grant deed, and that the grant deed was therefore void.

Valerie filed a demurrer to the claim, basing her argument on the statute of limitations.

Trial court ruling: demurrer sustained and case dismissed

The trial court sustained Valerie’s demurrer and dismissed the case.

The court found that the three-year statute of limitations from Code of Civil Procedure section 338 applied since the claim was essentially based on fraud.

The court found the claim was not timely, because Randy (the father, to whom the claim belonged before his passing) was aware that Valerie was claiming a joint and equal interest in the property as early as 2007, when Valerie served Randy with papers seeking a domestic violence temporary restraining order, in which she asserted her joint rights in the property.

The Court of Appeal’s Opinion

The Court of Appeal affirmed.

The court rejected Scott’s argument that a quiet title claim based on a void deed is not subject to any statute of limitations and can be brought “at any time.”

Citing Salazar, the court reaffirmed that courts generally look to the underlying theory supporting a quiet title claim to determine what statute of limitations applies, and left intact the trial court’s determination that the three-year limitations period applied since the claim was based on fraud. But unlike in Salazar (where the statute never started running), here there was an ample showing that Randy knew of Valerie’s claim for joint ownership of the property by 2007.

The claim was therefore time-barred.

Lesson

Even if there is good evidence supporting an argument that a deed is void, that doesn’t mean the deed can be ignored or that it can be assumed to have no impact on title. A quiet title claim challenging a void deed must still be brought timely.